CHAPTER 22

INVESTMEN
T
PROPERTY
PAS 40
 INVESTMENT
PROPERTY

Is defined as property (land or building or part of a building or both) he

ld by an owner or by the lessee under a finance lease to earn rentals
or for capital appreciation or both
 NOT QUALIFIED

LAND EQUIPMENT
INVESTMENT
PROPERTY
ANY MOVABLE
BUILDING PROPERTY

QUALIFIED
An investment property is not held:

A. For use in the production or supply of goods or services or

for administrative purposes.

B. For sale in the ordinary course of business. 

 OWNER-OCCUPIED
PROPERTY

Property held by an owner for use in the production or supply of

goods or services, or for administrative purposes
 EXAMPLES OF INVESTMENT PROPERTY:
Building owned by
reporting entity Land held for Property that is being
leased out under an long-term capital constructed or developed
operating appreciation for future use as
lease. investment property.
Building that is
vacant  but it is held
Land held for a
to be leased out
currently
under an operating
undetermined use.
lease.
Partly Investment and Partly Owner-Occupied

If the owner uses part of the property for its

own use, they are accounted for separately
as investment property and owner
occupied property. 
PARTIAL
OWN USE If the portions could not be sold separately,
the property is investment property if only
an insignificant portion is held for
manufacturing or administrative purposes. 
 Services are a relatively insignificant
component of the arrangement, the
property is treated as investment
ANCILLAR property.
Y
However, if the services provided are more
SERVICES significant component of the arrangement,
the property is treated as owner
-occupied property.
ANCILLARY SERVICES
 Those which do not in themselves represent a separate
and distinct item purchased from you by your corporate
client.
 They are services provided by you as an enhancement
or improvement to your core activities.
 PROPERTY LEASED GROUP ENTITY

TO AN AFFILIATE If the entity is owned by the

group as a whole and for the
purpose of consolidated
financial statements, the
property is treated as
INDIVIDUAL ENTITY owner-occupied property.
If the individual entity owns it,
the property leased to
another subsidiary or its
parent is considered as
investment property
 RECOGNITION The cost of the
It is probable that the
future economic benefits OF investment property
can be measured
that are associated with
the investment property
INVESTMENT reliably.
will flow to the entity. PROPERTY
 INITIAL MEASUREMENT
OF INVESTMENT PROPERTY

Investment property initially Such cost should not include:

measured at cost, including • start-up costs
transaction costs. • abnormal amount of wasted
material
• Initial operating losses
The cost of a purchased
investment property
incurred before the investment
comprises the purchase
property achieves the planned
price and any directly
level of occupancy.
attributable expenditures.
SUBSEQUENT MEASUREMENT
OF INVESTMENT PROPERTY

IAS 40 permits entities to choose between:

Fair Value Model Cost Model

• The investment property is • The investment property is carried

carried at fair value. at cost less any accumulated
depreciation and any accumulated
• Any changes in fair value are
included in profit or loss impairment losses.
• Fluctuations in the fair value of the
• No depreciation is recorded investment property from year to
for the investment property. year are not recognized.
 FAIR VALUE
The price that would be received to sell an
asset in an orderly transaction between
market participants at the measurement
date.
 FAIR VALUE OF INVESTMENT
PROPERTY

The price in the principal The fair value of invest

market used to measure ment property excludes
fair value shall not be prepaid or accrued
adjusted for transaction operating lease income.
costs.
 INABILITY TO

DETERMINE
PAS 40, PARAGRAPH 53 FAIR PAS 40, PARAGRAPH 54

VALUE states that an entity that

mandates that an entity
shall measure such
investment property
using the cost method
until the disposal of the
investment property.
uses the fair value model
RELIABLY shall continue to measure
other investment property
at fair value,
notwithstanding the fact
that one investment
property is carried using
the cost model due to
exceptional cases.
 Commencement of owner occupation
Transfer from investment property to owner-
occupied property

Commencement of development
with a view sale
Transfer from investment property to
TRANSFER inventory.
OF
INVESTMENT
PROPERTY End of owner occupation
Transfer from owner-occupied property to
investment property

Commencement of an operating lease

to another entity
Transfer from owner-occupied property to
investment property
MEASUREMENT OF TRANSFER
Cost model, transfers between investment
01 property, owner-occupied property and inventory
shall be made at carrying amount.

Transfer from investment property carried at fair,

02 value to owner-occupied property or inventory
shall be accounted for at fair value which become
the deemed cost for subsequent accounting.

If owner-occupied is transferred to investment

property, the difference between the fair value and
03 the carrying amount of the property shall be
accounted for as revaluation of property, plant
and equipment.
MEASUREMENT OF TRANSFER
If an inventory is transferred to investment property
04 that is to be carried at fair value, the
re-measurement to fair value shall be included in
profit or loss.

When an investment property under construction

is completed and to be carried at fair value, the
05 difference between the fair value and carrying
amount shall be included in profit or loss.
DERECOGNITION
An investment property shall be
OF INVESTMENT derecognized:
PROPERTY
On Disposal 01

When the investment property is

02
permanently withdrawn from use.

When no future economic benefits

are expected from the investment 03
property
DISPOSAL OF INVESTMENT PROPERTY

Gain and losses from disposal of investment

property shall be determined as the:

Difference between the net disposal proceeds

and the carrying amount of the asset
DISCLOSURES Whether the entity uses the cost model or
RELATED TO fair value model of measuring investment
property
INVESTMENT
PROPERTY
The amount of rental income for the period
along with the related expense

Restrictions on the investment property

either through rentals or sale proceeds

Contractual obligations to purchase or

construct investment properties.
Thank you!